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Air Serbia CEO: Right time to go long haul

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Air Serbia's long haul network to strengthen European operations

The CEO of Air Serbia, Dane Kondić, has said that now is the best time to introduce long haul flights, adding that the airline will strengthen and feed its short haul network by launching services to New York this June. Speaking to the "TangoSix" portal at the Global Aerospace Summit in Abu Dhabi, Mr Kondić said, "The only right time is the one that works for you. We have figured that for our business, and our business model, we would reverse engineer it. Rather than go the traditional route of strengthening our short haul network to then go long haul, we figured that for us, at this juncture, it was better to go the other way - to launch long haul so that that could, in fact, strengthen our short haul network and provide feed on to our short haul network". Mr Kondić added, "The biggest single expense of flying long haul is the cost of fuel and given where fuel is today, if you were ever going to launch long haul flying now is the time to do it. First mover advantage will give us enormous benefit and we are all very excited and the planning continues to a successful launch on June 23".

Air Serbia's CEO noted that sales for the airline's service to New York have so far "exceeded expectations". The carrier plans to launch flights to the Big Apple with a single Airbus A330-200 aircraft. "In relation to one aircraft operation, there is always a risk of whether you got 1 or 100. The question is what's the contingency plan. That is always the issue here rather than how many aircraft you have. We are fortunate because of where we are. We have partnerships today with Air France, KLM, Alitalia, Air Berlin, Virgin Atlantic and LOT Polish. We have five good options there in the event that our aircraft goes tech. So, we have relatively easy access to ferry our passengers across partners to their final destinations in New York or beyond", Mr Kondić said. He added, "The bigger issue is what happens if the aircraft goes technical for more than one or two days, four, five days. We are fortunate because we have a strategic partner [Etihad Airways] who has an aircraft parked in the garage here, which is a A340-500, and that is at our disposal for as and when we should need it".

The head of Air Serbia defended the airline's decision to cut down on frequencies and capacity this winter season, which has had a knock on effect on its hub in Belgrade, which has seen its passenger numbers decline from October 2015 through to January this year. "The one thing that we have always had in our minds, from the very beginning, is a commercial mandate. Flying empty aircraft over the winter just to keep a schedule is crazy. So, last winter we had two years of experience behind us, meaning to say that we had two summers and two winters, and therefore we knew exactly where the pain points were in the network. As we have progressed on our journey, what has been critical has been focus on profitable operations. We took out capacity, for sure, and there was criticism from some that it was too much, we didn't break the connectivity, we certainly did lose some connectivity, but we pulled back frequency and so we tried to keep the integrity of where we flew relatively intact. The prime goal was to take out capacity to therefore boost our load factors", Mr Kondić explained. "Now, what's happened, we have had financial results for November and December and I can tell you that based on the previous year, we have had far more profitable operations - load factor increase of 4 - 5%, yield increases of about 9 - 10% and RASK (Revenue per Air Seat Kilometre) improvement of almost 20%. By any measure, I think it was a fairly smart, wise and good move", he concluded.

I dont see a rush. All was mentioned was from Mali saying that another A330 was to join the fleet to expand to another destination by the years end. PEK was mentioned and BKK rumoured, a couple of us here say it will be YYZ or ORD.

Price of fuel has dramatically dropped as well, which would help reduce the loss while the route/s mature.

It hasnt really exposed anything if you look back to things. From day 1 I didnt like the fact Vlaisavljevic would be running the airport and still dont. I didnt expect any better and dont expect things to dramatically change in the near future unfortunately.

A growing airport with record pax numbers, cargo figures and profits should be growing and expanding, and all there is is just empty plans

BEG is governement owned just as is 51% of JU. Serbia chose not to give cash but subsidies for a certain time for the equivalent amount when it entered into the partnership with EY.

Half of BEG's profits also come from other airlines as you mentioned, LH, SU etc, BEG boasts about these profits however hasnt invested back. If JU is a problem then why havnt they sought out other carriers? After all we do have open skies with the EU as well as other countries (UAE for example). Instead foreign carriers are ignored by BEG management, service is crap while paying a premium (not expensive but not cheap either). JU subsidies are not the reason why BEG doesnt do proper maintenace at the airport such as replacing light bulbs and keeping facilities clean, brooms, sponges, disinfectant and light bulbs arent expensive investments! Wizz and YM used to recieve huge subsidies compared to Jat, was that the reason it took more than 10 years to refresh T2?

JU is at the end is the day that is bringing the growth to BEG, who is bringing BEG other sources of revenue (retail as an example) and its BEG who has no proper plan of investment. BEG lacks proper management!

You can't seriously compare the subsidies YM received to the ones JU is getting. The difference is calculated in the millions.

The issue is that JU carries half the passengers at the airport and pays almost nothing- that is it pays nothing in general. The only revenue BEG has from JU is the one it gets from passenger taxes.

The airport is overburdened and half of its income has suddenly disappeared. On top of all that, Air Serbia has not become what it was promised it would be. Their future expansion (or future in general?) is uncertain so why should BEG invest in infrastructure before JU becomes a self-sufficient airline?

BEG gets more revenue from JU than just taxes. As a JU passenger I buy myself a cup of coffee, something to eat etc. The shop isnt set up for free. Airports generate alot of profit fromretail etc. Plus pax taxes from JU isnt small money considering JU brings in over half the pax count in BEG. Im sure you are smart enough at basic mathematics. JU gives BEG double that just in taxes compared to the subsidies given. Subsidies end this year and then what?

Im not saying build a new runway, a massive terminal, im talking basic things such as a decent coffee shop, bring in a fast food outlet etc which would generate the airport additional income and are things passengers would use.

I agree that the airport is overburdened, but with lazy people who dont do a proper and efficient job.

As for Air Serbia as to what it has become, certainly not Jat thats for sure. We get better value for the money invested, Jat brought hundreds of millions of Euros of debt, with a third of the current fleet, which Vlaisavljevic contributed to. Air Serbia is growing, will grow again this summer season, and plans to grow more in the future. Just this season they will add JFK, KBP, OHD and PRN by the way it looks now. All more tax revenue for BEG.

To finish things, you still havnt answered as to what is difficult to do general things at the airport such as keep toilet facilities clean and change light bulbs!

I didn't answer your question because these are two different matters. Obviously that Vlaisavljevic is bad at properly running the airport but then again the difficult situation is made worse by JU not paying anything. I would also like to remind you that the number of shops at the airport has not considerably increased since JU started flying... so the income from rents has pretty much remained the same. So no, JU has not contributed in such a manner. Furthermore, most JU passengers don't have long connections @BEG so most of them have barely any time to spend at shops and so on. Foreign carriers in BEG which carry O&D pax are far more lucrative in taht regard.

Yes, Jat was a disaster and has cost us a lot but Air Serbia is still not a profitable airline and it's still costing the average taxpayer. You will be able to use that argument once they get off the national subsidies. Let's see what happens at the end of the year and if the government extends the scheme. I think most Serbs would rather have a lowcost as their national carrier that could pay its bills than to have some vanity project that keeps on wasting government funds... while that same government is cutting the salaries of doctors, teachers and so on.

So why are doctors and others receiving less money? So that Dane, Vucic, Mali and Hogan can play aviation? Sorry, in a capitalist world that's not how things work.

Many if not most connections are roughly 2 hours, they can be more. My connection was 2 and a half hours. Take a look at the schedules and you will see. Ive seen people in BEG making connections of 12 hours!

Number of shops havnt increased and is what I am talking about. BEG could increase revenue by adding more than just a mafia run casino, which seems to be closed now. Passengers would for sure use fast food outlets for example, perhaps a beer bar. Would also employ more people in our country.

Foreign carriers don't just carry O&D, for example on my last AUH flight had quite a few connecting pax from SVO that flew in with SU. BEG could always attract more carriers to fly to BEG but don't. Actually, EK has been looking into BEG and ZAG and while ZAG was quick to respond to EK, BEG wasn't, with EK attempting many times to get a response from BEG which took almost 2 months!

I don't disagree that Air Serbia doesn't cost our tax payers money, however so did Jat. Looking into the subsidies given to Air Serbia in 2015 was a little less than the minus Jat made in its final year with creative accounting. Jat never payed to anyone which is where a lot of debt accumulated, unlike Air Serbia who pays for catering, fuel etc in BEG. Not only that, Air Serbia has hired hundreds more people and will hire hundreds more, use local suppliers for catering which is good for our businesses, actually JU with their advertisments and marketing are attracting more tourists to our country. We cannot look at everything just positive and negative, even a rose has thorns.

As for salaries of doctors and teachers, that isn't the fault of Air Serbia. Besides, countless numbers of doctors demand bribes from patients for treatment and care. I'm sure theyre just fine. And just look into how much money is spent in political campaigns, again all tax funded. Lets not move on to Serbian Railways who lose hundred of millions of Euros annually, plus the amount of money stolen from infrastructural investmets such as roads, and the illegal tenders for Prokop. Air Serbia is the least of our problems.

Finally, low cost carriers are not a solution. Look a little south in SKP where Wizz doesn't pay taxes while it bases foreign registered aircraft and on top of it all receives government subsidies from the MK government. Macedonian connectivity to fallen despite the rise of Wizz in SKP. I agree more low cost carriers should come to Serbia to bring affordable travel, however many of us rely on legacy carriers such as JU for travel especially to farer destinations.

Hmm no, it's not. Last year there were 30 passengers to SVO and the fare was €320. It's because of Etihad and because they thought that they could implement the same pricing policy. The only issue is that BEG is not AUH.

I hope the NYC turns out to work well. Remember that MA, OK, RO and even OA used to fly to NYC but all of them stopped. Not sure how it will work with JU having a smaller network. The regional market is just too small to feed the flights on a regular basis. Even 5 weekly flights in the winter seems a lot. But hey, lets wait and see.

MA - poor management, failed privatisation.OK - poor management. A310 had to be retired and no replacement. Now with 1 A330 they have only ICN, they could reopen the flights, demand is there. PRG will be served daily with EK on the A380 soon which shows demand is there but not catered to.RO - poor management and poor fleet. Mixed narrow body of B737 and A318, ATR42 and aging A310 doesnt spell a recipe for success.OA - poor management, overstaffed.

Just summed up in my opinion. Having said that Im not saying JU is the next best thing after sliced bread, however it is much better run than the airlines mentioned above. JU is becoming very much a numbers run airline, has brought in normal products absent from our part of the world yet normal else where (dedicated lounge, onboard wifi) and will introduce some nice things with the introduction of the flights which is not available in other Euro carriers (not sure if AZ has introduced it as of yet). The concept is good, service is excellent which could see some touch ups here and there in my opinion, but still one of the best products a European carrier offers. JU catering on longer sectors is fantastic and I dare say competes with TK.

As Dane has mentioned in the interview, theyve had 2 years to see what is working and what is not, unfortunately our airports are very much seasonal and is something they are working on. Regardless of another possible winter reduction, I dont think JFK will be reduced as they have not yet seen how it performs for a full year, as with the current destinations in the network.

as always a very optimistic view but its your view so no complains. One thing I laughed at was that JU catering is better than TK, I mean lets face it they are two different worlds. The flavours and spices in TK catering are not present in JU one. JU serves quality food, but flavour wise its bad actually. Last year I had both chicken and beef dishes with the chicken having zero spices, not even some sort of vegeta, while beef was spiced but so so. Also on short haul JU sandwich in no comparison to TK salmon sandwich, baklava, small fruit bowl, nuts,etc.

I didn't say JU catering was better than TK, I said it can compete. JU catering to AUH is quite good actually. 3 options to choose from, Serbian options marked to the side with a small Air Serbia logo. TK has top notch catering and deserves all the awards it gets. JU does get many positive reviews for catering.

Serbia isn't a country exactly known for spices. But we do have some tasty foods to showcase and could be a way to promote Serbia onboard Air Serbia. However, regionally the catering is bad, the sandwiches are bland. The contents of the bag are quite disappointing. The sandwiches are poorly labled with basic level of English. Jat used to have good sandwiches which were nicely packed back several years ago. Definitely room for improvement.

I am optimistic about Air Serbia because its a company from my country, who is actually growing and I think could bring some positive things to improve it. That doesn't mean that I dont critise it.

Regional catering in economy needs improvement. Sandwiches are no better than old JAT triangles in plastic packaging, if not worse. If they can't make it better for the same cost, just pull the plug on sandwiches and offer packaged snacks like a cereal bar. JATBEGMEL and I are supporters of Air Serbia but those sandwiches are really bad: improve or replace.

Airlines from Europe operating JFK flights with A330-200: Alitalia, Air Berlin, Aer Lingus, Air Europa, Air France..The rest of the world: Qatar Airways, Royal Jordanian, Aerolineas Argentinas, Hawaiian Air, Delta, Tame, Avianca.. not bad company at all

"Kao sto rece gore neko ostali iz istocne Evrope su imali krseve od aviona."Haha,are you serious? I travelled with both CSA and Olympic years back and one thing I have to say is that at that TIME (more then 7 years ago) those aircraft were not krsevi and they were maintained just fine. A310 was at that time like the B767-300 is now and as you can see a large number of companies use them now and same goes for A340-300 with a number of companies still using them.In 7-8 years we will say how A330 is a "krs" because of A350, A330 neo, B777X etc.

Not a one European airline flies to Australia exempt British. Not Air France, not Lufthansa, not Iberia, KLM, Alitalia, Finnair, SAS, Aeroflot, not even Turkish... Doesn't that show you how unreal your opinion is.

I did say a 'long shot' . Kondic is indicating 'long haul' surely it cannot be ruled out for the future. So what if British Airways is the only European airline flying to Australia? With Air Serbia's low cost base than all those airlines you mentioned, they can easily work with Etihad and complement each other.

It's about time European carriers break with the 'codeshare' trend and give Australia a go again. Australians love travelling overseas and they deserve more competition.

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